Introduction to first-party/no-fault accident benefits
To assist the reader, obscure words, or words with a specific legal meaning will be included in a glossary.
In Ontario, victims of automobile accidents are generally compensated through ‘first-party’ or ‘no-fault’ insurance; because each person access their own insurer for compensation despite who causes the accident. This form of compensation consists of a list of government-regulated benefits, commonly called ‘accident benefits’. This blog post will discuss the legal authority underpinning accident benefits and the compensation scheme included in every car insurance police in Ontario today.
Legal Authority for Statutory Accident Benefits
In Ontario, with few exceptions, automobiles must be insured before being operated.1 Under the Insurance Act, specific benefits are made mandatory in every car insurance policy sold in Ontario.2 These benefits cannot be opted-out of, even if a consumer does not want the benefits. 3 As a result, most victims of automobiles accidents in Ontario can expect to be insured with accident benefits.
The Insurance Act forms a complete code for resolving disputes relating to accident benefits,4 but application procedures as well as the specific benefits are set out in the Regulation the Statutory Accident Benefits Schedule 5, commonly called the ‘SABS’.
The Compensation Scheme
The SABS regulation sets out mandatory benefits that must be included in Ontario car insurance policies, as well as optional benefits. Mandatory accident benefits can be understood in three general ways:
First, what do accident benefits provide the insured person? – In short, most benefits are monetary payments directly to the insured person, or to a service provider, such as rehabilitation therapists on the insured person’s behalf. Payments to the insured person occur in the form of money for specific ‘incurred expense’, one-time payments, and recurring weekly payments for things such as lost income.
Second, when is an insured person entitled to receive accident benefits? – The SABS creates tests for an insured person’s entitlement to the different types of benefits. Whether one meets a particular test is a legal and medical issue, requiring interpretation of the words of the test, and medical evidence. While an insurance company does not always require an insured person to submit medical evidence before it will pay a benefit, it is entitled to any information ‘reasonably required’ to make its decision. 6
Third, how long do accident benefits last? - A benefit is only payable as long as the insured person continues to meet the test for entitlement. Some of the tests for benefits change to become more difficult after a period of time, requiring a higher degree of impairment for an insured to continue to be entitled. For recurring payments, the SABS allows the insurer to re-assess the insured person at regulated intervals. Also, many accident benefits are time-limited and eventually expire, while others have maximum limits on available funds for an insured person; once the amount runs out those benefits will stop. However, a few benefits may continue to be paid until the death of the insured person.
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- Compulsory Automobile Insurance Act, R.S.O. 1990, Chapter C.25, s.2.
- Insurance Act, R.S.O. 1990, Chapter I.8., s.268.
- Supra note 2, s.279 (1).
- Liberty Mutual Insurance Company v. Fernandes, 2006 CanLII 30212 (ON CA).
- Ontario Regulation 34/10, Statutory Accident Benefits Schedule – Effective September 1, 2010.
- Ibid, s.33 (1).
The contents of this blog are intended to provide general information on the law. It is not intended to form any solicitor-client relationship. Readers are encouraged to seek independent legal advice.